BUDGET | Main takeaways as Reeves promises to rebuild economy
Citing Labour’s overhaul of the planning system as proof that this government is an agent of change, chancellor Rachel Reeves was borderline buoyant throughout her Budget speech despite the early release of the Office for Budget Responsibility’s report stealing much of her thunder.
Reeves told the Commons that her Budget would “cut debt, cut borrowing, cut the cost of living, and cut NHS wait times”.
Her Budget will increase borrowing by £5bn on average over the next three years and reduce it by £13bn on average for the two years after, according to the Office for Budget Responsibility.
Conservative Party Leader Kemi Badenoch was not impressed, calling for Reeves to resign and describing the Budget as a “smorgasbord of misery”.
OBR on housing
Reeves was right to celebrate the impact of planning reforms, according to the OBR’s analysis. The agency predicts that while the number of new homes being built will fall from 260,000 a year in the early 2020s to 215,000 in 2026-27; it will increase to an average of 305,000 being delivered in 2029-2030.
Meantime, the average house price is expected to rise from £260,000 in 2024 to just under £305,000 in 2030.
Residential investment is forecasted to grow from 1% this year to 7% in 2027 and 2028, shrinking to 2% by 2030 after the initial impacts of the planning reforms fade.
What the Budget means for the built environment in the North and Midlands
Planning and skills
A promise to boost planning capacity is one of the main takeaways for the built environment from the Budget. Reeves will be investing £48m to recruit 350 planners, accomplishing this by expanding the Pathways to Planning Graduate Scheme and creating a Planning Careers Hub.
The Budget claims that by doing this, and funding improvements for environmental regulators, the number of recruits for the planning system will be 1,400 by the end of this Parliament.
Reeves also committed £725m for the Growth and Skills Levy to support apprenticeships. This includes fully funding apprenticeships for those under 25 years of age.
Neighbourhood health centres
Reeves promised 250 new neighbourhood health centres in the UK – of which 120 are due to open by 2030. This number includes a refurbished Alfred Barrow Health Centre in Barrow-in-Furness, according to Budget documents, as well as Stockland Green and Summerfield Primary Care Centres in Birmingham.
Mansion taxes
Starting in 2028, Reeves will introduce a high-value council tax surcharge in England. This will put an additional £2,500 charge on properties worth more than £2m, and £7,000 for those worth more than £5m. She said that this would raise £400m by 2031 and only impact the top 1% of properties. To justify the project, she evoked the North-South divide – speaking about how a resident of Blackpool may pay more in council tax than someone living in a Mayfair mansion.
Business rates
Retail, hospitality, and leisure operators will no doubt be breathing a sigh of relief after hearing that their business rates will be permanently lowered. Reeves said this would impact 750,000 properties.
The Budget outlines how it will look in practice – with RHL multipliers being reduced to 5p below national equivalents. This will put the small business RHL multiplier at 38.p and the standard RHL multiplier at 43p in 2026-27, the lowest tax rate since 1990-91 for small businesses and 2010-11 for standard properties.
This will be funded by making the multiplier rate up to 10p higher than the national standard for properties worth more than £500,000. However, Reeves’ Treasury will only put the rate up 2.8p above the national standard multiplier “in recognition of the important role these properties play in the government’s growth mission,” according to the Budget.
Reeves also committed to establishing the Leeds City Fund, which will support development in the city through a business rates retention zone in the city centre. Leeds City Council will be able to retain 10% of business rates growth above an agreed baseline for 25 years as part of this agreement.
The government is also exploring creating business rate retention zones in South Yorkshire and the North East.
Liverpool City Region Combined Authority’s business rates retention pilot was also extended through 2029.
The Treasury said that the business rates support package in the budget was worth £4.3bn.
Devolution flexes
It was a big day for the mayors. Reeves said that she was devolving £13bn in flex funding for mayors to invest in skills, business support, and infrastructure.
This is in addition to the £1.3bn in the budget for the National Housing Delivery Fund – which is going towards Greater Manchester, Liverpool City Region, North East, South Yorkshire, West Yorkshire, and the West Midlands. These funds will go to support projects such as Liverpool Central Docks and Forth Yards in Newcastle.
The Budget also builds upon the earlier announced Pride in Place with £902m over the span of four years to be spent on local growth funds. There will also be a £500m Mayoral Revolving Growth Fund for mayors in the North and Midlands through an integrated settlement.
These mayors will also be able to bid for money from the £7bn successor to the Affordable Homes Programme.
Electric vehicles
The Budget includes £200m for EV charging infrastructure as well as a promise for 100% business rates relief for EV charging points over the next decade.
However, it’s not all good news for electric vehicles. Reeves promised to introduce an Electric Vehicle Excise Duty, a mileage charge for EVs and plug-in hybrids. This would be effective from April 2028.
Landfill tax row back
Reeves abandoned plans to change the way landfill tax is conducted. Earlier in the year, the government had consulted on changing the two-rate system to a single one. The current system has a standard rate of £126.15/tonne and another of £4.05/tonne for less harmful materials.
Instead, the government said it would change its approach to landfill tax to ensure changes were “proportionate, do not impose unavoidable costs on businesses, and do not undermine the government’s target of building 1.5m new homes in England”.
The Budget adds that a tax exemption for backfilling quarries will be maintained.
Warm Homes boost
The government is investing an additional £1.5bn into the Warm Homes Plan, which helps homeowners improve the energy efficiency of their property. This is in addition to the £13.2bn promised in the Spending Review for the program.
Minimum Wage increase
The National Minimum Wage for 18-20 year olds will increase 8.5% to £10.85/hr, while apprentices and 16-17 year olds will see their minimum wage increase 6% to £8/hr. As of April 2026, the National Living Wage will be £12.71/hr.
Leeds love
Is there a Northern city more beloved than Leeds in this Budget? The answer is no. Leeds got a whopping 18 mentions, with the Budget referencing its likely new town (Leeds South Bank), the creation of Leeds City Fund, and a promise to headquarter the new National Housing Bank in the city. Oh, and the Budget reminded readers that the government had provided the £45m that is being used to create the multi-modal gateway at Leeds Rail Station. Manchester received only 10 references, Liverpool 12, and Newcastle 2. Birmingham had five nods, of which one was a footnote.
Northern Powerhouse Rail?
Alas, those hoping for a surprise commitment for Northern Powerhouse Rail were left disappointed. Reeves said she was supportive of the idea in her Budget speech, but the rail link is nowhere to be found in the Budget document itself.
New towns missing
The House of Lords’ recommendation to build new towns into the Budget was ignored by Reeves. While the programme got a nod, the most it got in terms of a financing programme was this: “The government will continue to consider the ways in which private finance can support the delivery of wider infrastructure ambitions, including leveraging private finance to help deliver the next generation of new towns.”
